Growing up fast needn’t be painful. Sure, it’s quite normal for founders of fast-growth startups to sometimes feel overwhelmed, says Andrew Thorn, CEO and founder of DigitalMaas, the platform that helps businesses market themselves online. Although it’s easier to stay on track when you have good people in your corner. What’s helped Thorn’s “digital marketing as a service” business grow when competitors have flamed out is the financial discipline instilled by its first investor and director, Sue Griffin.
“Sue set up really stringent policies for managing cash flow, and makes sure we regularly forecast revenue and spending,” says Thorn. “We reconcile cash weekly and then do more detailed reports every month.”
Thorn wasn’t naïve about keeping an eye on the cash when scaling a business — he’d already helped Australian cloud software firm Crucial grow from a few hundred customers to more than 4000 in three and a half years — and deliberately started DigitalMaas small, funding growth entirely from revenue. DigitalMaas began as a white label service sold as an add-on to classifieds in large newspapers, but Thorn had greater ambitions.
“Just before I went out to raise capital, one of the biggest resellers cancelled all its accounts to double its margins,” he says. “I had to explain to prospective investors why we had just lost 30 per cent of our revenue. The takeaway for me was that we need to own the customer. They can’t evangelise us if they don’t know us.”
Thorn soon grew his direct customers to 25 and planned to sign up a few hundred more within 12–18 months. To fulfil that ambition, he needed to make the platform scale — and set up financials to match. So, when Griffin agreed to give Thorn seed funding for DigitalMaas, she put her chartered accountant’s hat on.
“As a director and coming from a finance background [Deutsche Bank], I said, ‘I can help you set up the accounting,’” says Griffin. “When you’re involved in a startup, you have to be prepared to get your hands dirty. My skills are enabling strong financial foundations with cash forecasts. I wasn’t familiar with small business accounting systems, and I had to acquaint myself with software as a service, which these young entrepreneurs know all about because they don’t have the resources to employ accountants.”
DigitalMaas by the numbers
3 employees in first two years
55 employees now
25 clients in the first year
3500 clients now
Aiming for 10,000 clients
235 per cent earnings growth 2017–19
$6m–$8m annual revenue
Aiming for $8m–$10m annual revenue by end of 2021
Investors and mentors
Ideally, every startup will bring on an accountant early. As Griffin points out though, most founders are wrapped up in the tech, but don’t have the financial skills or governance experience. “Andrew has the vision and heart, and he works well with our investors. When we’ve needed funds, we’ve been able to present good financials and good customer reviews. Those two things plus great word of mouth for the business have helped us grow.”
DigitalMaas has just over a dozen private investors now, mostly entrepreneurs or C-Suite executives. The business hasn’t yet sought major venture capital. “We’re lucky to have a group of investors who are massive supporters,” says Thorn. “People from banking and legal firms, who’ve run high-growth tech startups, and plenty of management experience. Having backers you can go to for advice can be the difference between whether you’re successful or not.”
“Mentoring staff is a big role for a director,” adds Griffin. “As a confidante, you want to hear bad news straight away, whether it’s an unhappy customer or something costs us more than we thought it would, so you can help them solve it.”
Steady and sustainable growth
While some startups want a few million dollars in their first round for hiring sprees, Thorn says he’s careful about hiring too many people, too soon. DigitalMaas has taken around $4m in funding to date, mostly modest increments of $400,000–$500,000 when it needed to hire senior people.
Chief technology officer Scott Francis, from digital transaction firm ROKT, and chief operating officer Hannah Curtis, from e-commerce business Lux Group, were the first big hires. Thorn wanted them on board because they’d built high-performing teams almost from scratch before.
“When we recruit, we’re looking for experts,” says Thorn. “But we have to be careful not to think this person will solve all our problems. Scott, Hannah and I implemented a second round of interviews, where the person interviewing the candidate doesn’t know about coding or sales — their focus is protecting our culture and finding out how resilient we are.”
On coping with Coronavirus
Our business is exposed as many of our clients are businesses that people physically visit, such as restaurants, and many are shutting their doors. We’re forecasting a 10 per cent reduction in revenue monthly for the next six months. None of our previous forecasts had predicted negative growth. All the forecasts had to be redone, all the growth plans rethought.
Businesses with private investors like ours should be asking those investors whether they can come to the table with funding to help you through. The number-one thing is how to continue to pay our staff and not have to let anyone go. We have 50–60 people working for us and many are transitioned to work from home. It’s important to double-check receivables, payouts and contracts to ensure you know where you stand. Then you look at multiskilling.
From a marketing perspective, it’s important to be nimble. For instance, search volumes have increased in certain verticals such as pharmacies and supermarkets — I’m talking 300 per cent month-on-month rises. It’s about how you jump on those trends. More digital-marketing specific is communicating effectively that you’re still operating — and the changes you’ve made to how you operate. People are searching for information, so answer those questions for them.
Automation for the people
It might be lean compared to its competitors, but DigitalMaas has lifted productivity by automating as many tasks as possible. Most of its business operations software is standard out of the box. “It’s tempting when you’ve got a really technical team to build bespoke solutions,” says Thorn. “But we’ve got smarter at taking something off the shelf and using it for our purposes, so our developers can code for our platform.”
A few years ago, Thorn and Francis decided to try an enterprise-grade customer relationship system that was hugely configurable. But it was so customisable, it took too many engineering hours away. A few months later, the team adopted a popular sales and marketing platform with more standard operating procedures. “Even when you have heavy technical skills, you’ve got to keep things simple and efficient,” he says. “We’ve focused our technology investment on our own software-as-a-service model, which makes marketing easier for our customers. Technology really doesn’t need to be complicated.”
Thorn wants DigitalMaas to become the number-one local marketing platform in Australia and make more footprints across Asia. Long-term relationships are vital to sustainability and Thorn is proud DigitalMaas has worked for several years with firms such as ITP (Income Tax Professionals), Laser Clinics Australia and the Solotel Group, which operates popular venues such as Opera Bar.
“We’re growing by teaching marketing strategies to more small businesses so they can succeed,” he says. “The more we position ourselves as experts, the more people reach out to us.” DigitalMaas ranked in the top 300 of the Deloitte Technology Fast 500 Asia Pacific for 2019 after reporting 235 per cent growth between 2016–2019, placing it in the top 50 Australian companies on the list. Thorn wants similar or greater growth in the next 12 months. “We have around 3500 customers in our platform, so we’ve scaled up dramatically,” he says. “We expect to get somewhere between five and 10,000 into the platform by the end of 2020 — [we have] pretty aggressive growth plans.”
Digital marketing insights
Many business don’t get traffic because something isn’t set up properly, like opening hours or product range.
People search for local businesses first, especially if they need a product or service right away. Tools such as Google My Business let you publish updated opening hours and product and service categories, along with images, so you attract more customers in store.
Monitor all your digital channels and respond quickly. Acknowledge issues and find out what you can do to help.